The regulatory action coincides with a criminal probe into alleged stock market manipulation. Justice Minister Akin Gurlek announced on Friday that four suspects, including investment fund board members, had been arrested. Additionally, travel bans were imposed on 51 other individuals linked to the investigation. Courts have approved precautionary measures to freeze accounts and assets associated with those under scrutiny to prevent the transfer of funds. Gurlek stated that individuals exploiting the savings of citizens would be held accountable by law.
The crisis intensified after the SPK identified irregular price movements in funds concentrated in thinly traded shares. The regulator noted that some funds had caused price fluctuations that could not be explained by the underlying financial realities of the companies involved. In response, new measures were introduced to prevent market manipulation and enhance transparency. On Wednesday, trading on the Istanbul Stock Exchange was temporarily suspended after the benchmark BIST 100 index fell by more than 6 percent, triggering a circuit breaker. Despite the turbulence, the index closed higher on Friday, rising 0.09 percent.
The liquidation process does not imply the confiscation of investor assets. Instead, specific banks have been appointed to manage the wind-down of these funds. Is Bank has been tasked with handling the liquidation of funds previously managed by Tera Portfoy, while state-owned Ziraat Bank will oversee the assets belonging to the other six management companies. Proceeds from the sale of these assets will be distributed to investors based on their individual holdings. However, investors may not recover the last reported value of their portfolios, as the final payout will depend on the prices achieved during the asset sales.
Parallel investigations have targeted digital channels suspected of exacerbating market volatility. A court ordered the blocking of access to 246 social media accounts accused of publishing speculative material designed to cause fear or panic among investors. In a separate probe by prosecutors in Istanbul’s Bakirkoy District, 16 individuals were arrested over social media posts allegedly intended to manipulate capital markets. Interior Minister Mustafa Ciftci indicated on Thursday that operations related to the stock market investigation would continue, suggesting further legal actions are anticipated.
The immediate commercial consequence of the liquidation is the forced sale of assets from the 130 affected funds, which will alter the market supply of the underlying securities. For consumers and investors, the primary risk remains the potential discount on final payouts compared to last reported values. The situation highlights the vulnerabilities in funds holding illiquid positions and the regulatory focus on maintaining market integrity. The next phase of this development will likely involve the completion of asset sales and the distribution of proceeds by the appointed banks, alongside ongoing judicial proceedings against those arrested for manipulation and information dissemination.
